It must be a close-run thing whether David Cameron retains a distinct political memory of Harold Macmillan. The prime minister was an undergraduate when his veteran predecessor died 24 years ago this week at the age of 92. More pertinently, Cameron was only 13 when, in the summer of 1980, the long retired Macmillan – Conservative prime minister from 1957-63 – sent the remarkable 11-page private warning to Margaret Thatcher about her economic strategy which emerged out of the National Archives yesterday under the 30-year rule.

Anyone who can write so coherently about economic policy at the age of 86, as Macmillan does in his memorandum, deserves respect. He starts with an incisive summary of global economic imbalances and the dangers of recession, goes on to warn about the international banking system, expresses concern about low global demand, and calls for "not restriction and deflation, but powerful reflationary measures largely on capital account throughout all the countries of the west". Sounds familiar? The author of this part of the memorandum could just as easily be Gordon Brown as Macmillan.

In other places, the memo undoubtedly shows its age. Its main domestic concerns are high inflation, low productivity and steep interest rates that "in any other age" would have been regarded as "sheer usury". It contains a passionate lament about the refusal of the trade unions to reform. Money supply, totemic to Thatcher, is dismissed as a speedometer-style indicator that tells you a vehicle's speed but which cannot make it go faster or slower. As such, therefore, Macmillan's memorandum also reflects the distinct features of the economic crisis of 1980 as opposed to those of today.

Time and again, however, Macmillan says things that zing unerringly across the ages with no feeling of anachronism or special pleading. "What then can be said to have been gained?" Macmillan asks of Thatcher's squeeze on public expenditure. "Certainly a shock has been given by the government's policies to the nation as a whole, and even a sense of exhileration [sic] among those who believe that steady continuance of these deflationary policies will achieve the desired result." Industrial and commercial viability, on the other hand, has been ignored. The very same words could be uttered today.

But Macmillan saves his sharpest thrusts for his final paragraph. Consensus politics, he writes, may be sneered at by some but is the essence of Tory democracy. "Divisive politics in a democratic system," he concludes, "are not likely to be applied for sufficient length of time to become effective even if such methods were desirable. Nor can permanent deflation be a credible solution to the threat of national and international recession."

How should a Tory prime minister of 2010 regard Macmillan's warnings against Thatcher's divisive politics and his calls for a return to consensus? Senile Edwardian irrelevance? Or another piece of enduring pragmatic good sense from a man who often began his speeches by saying that the first rule of politics was never to invade Afghanistan?

The Daily Mail was in no doubt that Macmillan's siren message was sufficiently threatening to its Thatcherite view of the world to require a blast from both editorial barrels. The memo was patronising advice from the man who presided over Britain's decline, the Mail leader insisted. Cameron must stand firm, as Thatcher herself did, against "latter-day Macmillans urging him to go easy on the cuts and make endless concessions in the name of consensus".

Cameron didn't get where he is today by following the Mail's advice. He will be profoundly mistaken if he follows it this time. Here's why. In the general election, the voters opted once again for the same generally pragmatic mix of economic and social policy promoted by Labour from 1997, only this time under different and more persuasive political management. The coalition got the keys to No 10 only on condition that it governed broadly in line with Labour principles but more honestly and with greater determination.

At first, the voters got what they wanted. Voters liked the coalition when it was clear that it was behaving like a coalition, with compromises, concessions and respect for alternative traditions. But now they find the coalition is increasingly ready to put an end to the balance in economic and social policy which the voters liked, were familiar with and which, crucially, worked. This is the opposite of what the voters expected, so the coalition is losing support.

It is quite likely that this would have happened anyway. The centre-ground has tended to shift slightly to the left, to a more welfarist agenda, under all postwar governments of the right – and conversely to shift slightly to the right under governments of the left. But the more that the coalition tries to move the centre-ground to the right, in the opposite direction to the one in which the public is travelling, and especially when it does so as quickly as it is now doing, the more it directly compounds its own political problems by narrowing its own base and weakening its own authority. Increasingly, it is not behaving like a pragmatic coalition at all, but like a sect with an alien project.

Macmillan's warnings about divisiveness are totally on the money here. Even if the drive to cut budgets and services by a quarter and more, and to radically reorganise health, schools and local government, were effective or right – and there is virtually no polling evidence that a majority believes they are either of these things – the approach is already beginning to run out of political time.

Yet it is still possible for the coalition to reclaim control over its own destiny. To do it, however, Cameron needs to be seen to compromise again and seen to adopt more moderate goals. A sudden change of policy, Macmillan told Thatcher in 1980, might create a sense of confusion in the party and among the voters. "There are however," he added, "many adjustments that can be made." It is a crafty new year message from the past that David Cameron needs to act on if his government is to prosper in 2011.